College of Business: University of Illinois at Urbana-Champaign

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Milnes Delivers Leighton Lecture


4/2/2010

by Sarah Small

This year's Leighton Lecture featured Andy Milnes, head of supply and trading for BP America who delivered his talk on “Ethical Leadership as a Competitive Advantage.” In his presentation, he spoke from personal experience, detailing a compliance issue at BP and the company’s actions and recovery.

“This is going to be a talk about my journey,” Milnes said. “It’s a personal story for me, a difficult journey for me personally; it’s also a difficult story for BP.”

In February of 2004, some traders at BP engaged in illegal trading activity that was eventually discovered, and affected BP fiscally and reputably.

“Often times, the reputational damage of an incident significantly out-weight the financial loss,” Milnes said. “It took BP 100 years to create a solid reputation, and a single incident to bring it reputable harm.”

As BP moved forward from this situation, Milnes said the company began to make changes that emphasized ethical training and stressed personal responsibility for the employees.

“It if doesn’t seem right, it most likely isn’t,” Milnes said. “That’s the problem; there were too many people willing to walk past it, and say, ‘It’s not my responsibility to find out what’s going on. It’s not my responsibility to stop it.’”

To provide support to employees, Milnes said BP created a compliance team whose job it is to ensure that BP observes regulations and protocols. It also provides training for employees regarding business communications and guidelines for traders and trader communications.

“Employees are now held to a higher standard,” Milnes said. “They’re trained that way. Employees understand their responsibilities and acting with integrity.”

A code of conduct was also created to help employees, “navigate the grey space between what is legally acceptable and what is right,” Milnes said.

As time passed, BP began communicating with the government, regulators and its peers as a way to check the progress it had made, Milnes said. He said it was important that the entire company recognize the importance of practicing ethical behaviors and embedding these behaviors into regular business practices.

Even with institutions in place, a company’s employees play the most important role in ensuring proper practices are observed, Milnes said. It is the responsibility of the employees to be aware of an organization’s activities and have the courage to report questionable behavior.

“There is no substitute for individuals exercising the confidence to do the right thing in the right situation,” Milnes said. “We as leaders need to make sure we set that right tone. People need to know where you stand, because if they don’t know, they’ll make it up, and if they do know they’ll follow you.”

Related:

Watch a video of the lecture.

UIUC College of Business